Business groups dominate the economic landscape in many economies around the world. While business groups overcome the institutional voids arising due to inefficiencies of external markets, they also possess market power, which could be economically and socially counterproductive, especially for...

We investigate how the manager of a publicly traded firm may distort operational decisions to signal product quality when he/she receives equity-based incentives offered by shareholders. We show that the shareholders' optimal incentive contract induces the manager to engage in wasteful actions....

We model a situation in which a single firm evaluates competing suppliers and selects just one. Suppliers submit bids involving both price and quality variables. The buyer makes a choice which from the supplier's perspective appears to contain a stochastic element - for example the buyer may...